Substantial security deposits are s natural deterrent for bad tenant behavior.

Would you have to tap into your reserves to add to that amount? 

Has anyone secured a line of credit from a bank and used this line of credit as their reserves that are required for more mortgages when acquiring buy/hold rentals?

I have worked with the permit office on commercial projects and their systems are just way behind and slow but I would still invest here with the correct team and reserves of course. 

You will not have any cash reserves to rehab the property, or deal with issues that crop up during the normal course of owning a rental property, which is very risky.

PMI is wonky - talk with your lender.If you only put 3.5 percent down you should have enough cash available for repairs and reserves and unforeseen expenses that always come up.

You would naturally want that difference to be basis so you don't pay tax on it. 

Use your $434 and add back vacancy and maintenance reserves.

The two contractors and property manager would be a natural start.The pm definitely, and likely the contractors too, should be well connected with local investors.Once you give up equity, you will not get it back.

It is commercial in nature.